Caution signal in home market

July 7, 1983

Washington

The housing market appears to have a strong green light. But a cautioning yellow light may be the long-term signal, according to a report just released by the United States League of Savings Institutions.

* The home ownership rate has declined nearly 1percent since 1980, according to the report. The decline marked the end of a ''steady, unbroken growth in home ownership rates in the United States since the 1940s.''

* Houses are out of the price range of many buyers. This remains a ''severe problem,'' the report says.

* A ''demographic mismatch'' exists. The growth of people entering the prime borrowing ages (25 to 44) is more rapid than that in the prime saving-age group (45 and over). The mismatch will shink the supply of money for home loans and make mortgages more costly.

To ease the 1984-88 housing credit crunch expected by the task force, the league proposes that younger Americans be given tax incentives to encourage savings, new mortgage vehicles attractive to institutional investors, and more use of adjustable-rate mortages.